Current, and Future, Tax Bill Concerns

The House and Senate tax bills now moving to conference committee each contain provisions that are of great concern to hospitals. And the increase to the federal budget deficit that the $1.5 trillion in tax cuts will generate may affect future funding of the Medicaid and Medicare programs, according to Republican legislators that crafted the bills.

The Senate bill, but not the House’s, contains a provision to repeal the Affordable Care Act’s individual mandate. MHA, the American Hospital Association, and others members of the Coalition to Protect America’s Health Care oppose eliminating the individual mandate as it would increase the rate of uninsured and raise premiums in the  non-group health insurance market. (Massachusetts residents 18 years of age and older would still be subject to the state individual mandate, which was introduced as part of the state’s 2006 healthcare reform law.)

Hospitals also oppose the House bill’s elimination of the tax exemption for private-activity bonds, which are an important source of low-cost capital that hospitals need for facility improvements that, in turn, are needed for safe patient care. Hospitals are similarly opposed to the repeal of the tax exclusion for interest on tax-exempt advance refunding bonds, which is included in both the House and Senate bills.

The House bill eliminates taxpayers’ ability to itemize deductions for large medical expenses, while the Senate bill does not eliminate deductibility for medical expenses, but lowers the threshold for medical expense deductions from 10% to 7.5% for two years. Hospitals have weighed in with opposition to both provisions.

The Republican bills – no Democrats in either the House or Senate voted “aye” – would increase the federal deficit by $1 trillion over 10 years, according to the Joint Committee on Taxation. Even Republicans who say the bill will spur economic growth generally agree with that deficit figure. To reduce the deficit, the GOP says, Congress must cut spending especially among the so-called “entitlement programs” – Social Security, Medicare, and Medicaid. House Speaker Paul Ryan (R-Wisc.) and Sen Rand Paul (R-Ken.) recently made comments about the need to restructure the federal programs. 

MHA’s Congressional delegation has actively opposed the bills and Rep. Richard Neal (D) has been named a House member of the conference committee.

Last Friday, MHA sent this letter to the delegation thanking them for their past support on the tax issues and outlining the areas of concern for hospitals and healthcare. In that letter, MHA President & CEO Steve Walsh wrote, “We believe that if you talk with Massachusetts business owners throughout the state they would say any tax bill that undermines the financial stability of their local hospital, increases the cost of health insurance, and reverses the strides we have made in reducing the number of uncovered residents cannot be seen as economically beneficial for their communities. We urge you to keep in mind that the provisions in the legislation would occur in an environment where hospitals are already operating within increasingly burdened Medicare and Medicaid programs and existing sequester cuts.”